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[CS&M Draft--8/4/97]
ECCS, Inc.
2,000,000 Shares 1/
Common Stock
($.0l par value)
Underwriting Agreement
Tinton Falls, New Jersey
August [ ], 1997
Unterberg Harris
As Representative of
the several Underwriters
named in Schedule I hereto
c/o Unterberg Harris
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. 10022
Dear Sirs:
ECCS, Inc., a New Jersey corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representative") are acting as
Representative, 1,875,832 shares of Common Stock, $.0l par value ("Common
Stock") of the Company, and the persons named in Schedule II hereto (the
"Selling Shareholders") propose to sell to the Underwriters 124,168 shares of
Common Stock (said shares to be issued and sold by the Company and shares to be
sold by the Selling Shareholders collectively being hereinafter called the
"Underwritten Securities"). The Company also
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1/ Plus an option to purchase from ECCS, Inc. up to 281,375 additional
shares to cover over-allotments.
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propose[s] to grant to the Underwriters an option to purchase up to 281,375
additional shares of Common Stock (the "Option Securities"; the Option
Securities, together with the Underwritten Securities, being hereinafter called
the "Securities").
The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment or amendments thereto became or
become effective.
"Execution Time" shall mean the date and time that this Agreement
is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph (i) above and any preliminary prospectus included
in the Registration Statement at the Effective Date that omits Rule 430A
Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or,
if no filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph (i) above, exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time,
in the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date (as hereinafter defined including any
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documents incorporated by reference), and shall also mean such
registration statement as so amended. Such term shall include Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A.
"Rule 424" and "Rule 430A" refer to such rules under the Act.
"Rule 430A Information" means information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
Underwriters as set forth below in this Section 1. Certain terms used in this
Section I are defined in subparagraph (iv) of this paragraph (a).
(i) The Company meets the requirements for the use of Form S-2 under
the Act and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (file number 333- ) on Form S-2
including a related preliminary prospectus, for the registration under the
Securities Act of 1933 (the "Act") of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which has previously
been furnished to you. The Company will next file with the Commission
either (A) prior to effectiveness of such registration statement, a
further amendment to such registration statement (including the form of
final prospectus) or (B) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b)(1)
or (4). In the case of clause (B), the Company has included in such
registration statement, as
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amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be included
in the Prospectus with respect to the Securities and the offering thereof.
As filed, such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A Information, together with all
other such required information, with respect to the Securities and the
offering thereof and, except to the extent the Representative shall agree
in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective Date,
the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
not misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
Company and the Selling Shareholders
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make no representations or warranties as to the information contained in
or omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representative specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto).
(iii) The Company has not and will not in connection with the filing
of the Registration Statement or any other registration statement being
filed by the Company violate any provision of any contracts, agreements or
understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
being filed by the Company.
(iv) The Company's authorized equity capitalization is as set forth
in the Prospectus. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full power and authority to own its properties and conduct its
business as described in the Registration Statement and the Prospectus,
and the Company has full power and authority to execute and deliver this
Agreement and to issue and sell the Securities as herein contemplated.
(v) Each of the Company and its subsidiaries is duly qualified or
licensed by and are in good standing in each jurisdiction in which they
conduct their
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respective businesses and in which the failure, individually or in the
aggregate, to be so licensed or qualified and in good standing would have
a material adverse effect on the operations, business, condition or
property of the Company and the subsidiaries, taken as a whole; and the
Company and each of the subsidiaries are in compliance in all material
respects with the laws, orders, rules, regulations and directives issued
or administered by such jurisdictions and where the failure so to comply
would have a material adverse effect on the operations, business,
condition or property of the Company and the subsidiaries, taken as a
whole.
(vi) Neither the Company nor any of the subsidiaries is in breach
of, or in default under (nor has any event occurred which with notice,
lapse of time, or both would constitute a breach of, or default under),
its respective charter or by-laws or in the performance or observance of
any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
agreement or instrument to which the Company or any of the subsidiaries is
a party or by which any of them is bound, the effect of which would have a
material adverse effect on the Company and the subsidiaries, taken as a
whole, and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not conflict
with, or result in any breach of or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would
constitute a breach of, or default under), any provisions of the charter
or by-laws, of the Company or any of the subsidiaries or under any
provision of any license, indenture, mortgage, deed of trust, bank loan or
credit agreement or other agreement or instrument to which the Company or
any of the subsidiaries is a party or by which any of them or their
respective properties may be bound or affected, or under any Federal,
state,
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local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any of the subsidiaries.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of
the Company enforceable in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws affecting creditors' rights generally
from time to time in effect, and subject, as to enforceability, to general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(viii) The capital stock of the Company, including the Securities,
conforms in all material respects to the description thereof contained in
the Registration Statement and Prospectus and the certificates for the
Securities are in due and proper form and the holders of the Securities
will not be subject to personal liability solely by reason of being such
holders.
(ix) No approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission,
board,12 body, authority or agency is required in connection with the
issuance and sale of the Securities as contemplated hereby other than
registration of the Securities under the Act and any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Securities are being offered by the
Underwriters.
(x) Other than (x) such shares of Common Stock that may be issuable
pursuant to outstanding options and warrants, (y) as set forth under the
captions "Description of Capital Stock--Common Stock" and "--Registration
Rights" in the Registration Statement
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and Prospectus or (y) to the extent such rights to include any shares of
Common Stock in this Registration Statement have been satisfied or waived,
no person has the right, contractual or otherwise, to cause the Company to
issue to it, or register pursuant to the Act, any shares of capital stock
of the Company upon the issue and sale of the Securities to the
Underwriters hereunder, nor does any person have preemptive rights, rights
of first refusal or other rights to purchase any of the Securities.
(xi) Ernst & Young LLP, whose reports on the consolidated financial
statements of the Company and the subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus, to the
best of the Company's knowledge, are independent accountants within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(xii) Each of the Company and the subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any Federal, state, local or foreign law,
regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, in order to conduct their
respective businesses and where the failure to obtain such licenses,
authorizations, consents and approvals or make such filings would have a
material adverse effect on the Company and the subsidiaries, taken as a
whole. Neither the Company nor any of the subsidiaries is in violation of,
or in default under, any such license, authorization, consent or approval
or any Federal, state, local or foreign law, regulation or rule or any
decree, order or judgment applicable to the Company or any of the
subsidiaries the effect of which would have a material adverse effect on
the Company and the subsidiaries taken as a whole.
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(xiii) There are no actions, suits or proceedings pending or
threatened against the Company or any of the subsidiaries or any of their
respective properties, at law or in equity, or before or by any Federal,
state, local or foreign governmental or regulatory commission, board,
body, authority or agency which are reasonably likely to result in a
judgment, decree or order having a material adverse effect on the
operations, business, condition, prospects or property of the Company and
the subsidiaries taken as a whole.
(xiv) The audited financial statements included in the Registration
Statement and the Prospectus present fairly the consolidated financial
position of the Company and the subsidiaries as of the dates indicated and
the consolidated results of operations and changes in financial position
of the Company and the subsidiaries for the periods specified; such
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis during the
periods involved.
(xv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has
not been (i) any material and unfavorable change, financial or otherwise,
in the business, properties, prospects, regulatory environment, results of
operations or condition (financial or otherwise), present or prospective,
of the Company and the subsidiaries taken as a whole, (ii) any
transaction, which is material to the Company and the subsidiaries taken
as a whole, contemplated or entered into by the Company or any of the
subsidiaries or (iii) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of the subsidiaries which is
material to the Company and the subsidiaries taken as a whole.
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(xvi) The Securities have been approved for inclusion on the Nasdaq
Small Cap Market, subject to official notice of issuance.
(b) Each Selling Shareholder represents and warrants to, and agrees
with, each Underwriter that:
(i) Such Selling Shareholder is the lawful owner of the Securities
to be sold by such Selling Shareholder hereunder and upon sale and
delivery of, and payment for, such Securities, as provided herein, such
Selling Shareholder will convey good and marketable title to such
Securities, free and clear of all liens, encumbrances, equities and claims
whatsoever.
(ii) Certificates in negotiable form for such Selling Shareholder's
Series B Convertible Preferred Stock or Series C Convertible Preferred
Stock, as the case may be (collectively, the "Preferred Stock"), which
Preferred Stock is automatically convertible into Common Stock of the
Company, have been placed in custody for delivery pursuant to the terms of
this Agreement, under a Power of Attorney and Custody Agreement duly
authorized, executed and delivered by such Selling Shareholder, in the
form heretofore furnished to you (the "Power of Attorney and Custody
Agreement") with [ ], as Custodian (the "Custodian"); the
Securities represented by the certificates so held in custody for each
Selling Shareholder are subject to the interests hereunder of the
Underwriters, the Company and the other Selling Shareholders; the
arrangements for custody and delivery of such certificates, made by such
Selling Shareholder hereunder and under the Power of Attorney and Custody
Agreement, are not subject to termination by any acts of such Selling
Shareholder, or by operation of law, whether by the death or incapacity of
such Selling Shareholder or the occurrence of any other event; and if any
such death, incapacity or any other such event
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shall occur before the delivery of such Securities hereunder, certificates
for the Securities will be delivered by the Custodian in accordance with
the terms and conditions of this Agreement and the Power of Attorney and
Custody Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodian shall have received
notice of such death, incapacity or other event.
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Shareholder of the transactions contemplated herein, except such
as may have been obtained under the Act and such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals as have been obtained.
(iv) Neither the sale of the Securities being sold by such Selling
Shareholder nor the consummation of any other of the transactions herein
contemplated by such Selling Shareholder or the fulfillment of the terms
hereof by such Selling Shareholder will conflict with, result in a breach
or violation of, or constitute a default under any law or certificate of
limited partnership or limited partnership agreement of such Selling
Shareholder or the terms of any indenture or other agreement or instrument
to which such Selling Shareholder is a party or bound, or any judgment,
order or decree applicable to such Selling Shareholder of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Shareholder.
(v) This Agreement has been duly executed and delivered by or on
behalf of such Selling Shareholder and is a legal, valid and binding
agreement of such Selling Shareholder enforceable in accordance
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with its terms (subject in each case to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws
affecting creditors' rights generally from time to time in effect, and
subject, as to enforceability, to general principles of equity, regardless
of whether such enforceability is considered in a proceeding in equity or
at law).
(vi) When the Registration Statement becomes effective and at all
times subsequent thereto through the latest of the time of purchase,
additional time of purchase or the termination of the offering of the
Securities, the Registration Statement and Prospectus, and any supplements
or amendments thereto as relate to such Selling Shareholder will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) Each Representative represents and warrants to the Company and
each Selling Shareholder that it has the requisite authority to enter into this
Agreement on behalf of the other several Underwriters named in Schedule I
hereto.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
and the Selling Shareholders agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company and the Selling Shareholders, at a purchase price of [ ] per
share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several
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Underwriters to purchase, severally and not jointly, up to the total number of
Option Securities at the same purchase price per share as the Underwriters shall
pay for the Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the Underwriters.
Said option may be exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of the Prospectus upon written or
telegraphic notice by the Representative to the Company and such Selling
Shareholders setting forth the number of shares of the Option Securities as to
which the several Underwriters are exercising the option and the settlement
date. Delivery of certificates for the shares of option Securities by the
Company and payment therefor to the Company shall be made as provided in Section
3 hereof. In the event that the Underwriters exercise less than their full
over-allotment option, the number of shares of the Option Securities to be sold
by each party listed on Schedule III shall be, as nearly as practicable, in the
same proportion to each other as are the number of shares of the Option
Securities listed opposite their respective names on said Schedule Ill. The
number of shares of the Option Securities to be purchased by each Underwriter
shall be the same percentage of the total number of shares of the Option
Securities to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Securities, subject to such adjustments as you in
your absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third business
day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
[ ], 1997, or such later date (not later than [ ], 1997) as the
Representative shall designate, which date and time may be postponed by
agreement among the Representative, the Company and the Selling Shareholders or
as provided in Section 9 hereof (such date
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and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Representative
for the respective accounts of the several Underwriters against payment by the
several Underwriters through the Representative of the respective aggregate
purchase prices of the Securities being sold by the Company and each of the
Selling Shareholders to the Company and the Selling Shareholders or the
Custodian on behalf of the Selling Shareholders, by wire transfer in immediately
available funds. Delivery of the Underwritten Securities and (if the option
provided for in Section 2(b) hereof shall have been exercised) the Option
Securities shall be made at such location as the Representative shall reasonably
designate at least one business day in advance of the Closing Date and payment
for such Securities shall be made at such location in the State of New Jersey as
the Company and the Representative shall agree. Certificates for the Securities
shall be registered in such names and in such denominations as the
Representative may request not less than three full business days in advance of
the Closing Date.
The Company and the Selling Shareholders agree to have the
Underwritten Securities (and, if the option provided for in Section 2(b) hereof
shall have been exercised, the Option Securities) available for inspection,
checking and packaging by the Representative in New York, New York, not later
than 1:00 PM on the business day prior to the Closing Date.
Each Selling Shareholder will pay all applicable state transfer
taxes, if any, involved in the transfer to the several Underwriters of the
Securities to be purchased by them from such Selling Shareholder and the
respective Underwriters will pay any additional stock transfer taxes involved in
further transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third business day prior to the Closing Date, the Company will deliver (at
the expense of
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the Company) to the Representative, on the date specified by the Representative
(which shall be within three business days after exercise of said option), and
at such place as may be designated by the Representative, certificates for the
Option Securities in such names and denominations as the Representative shall
have requested against payment of the purchase price thereof to the Company by
wire transfer in immediately available funds. If settlement for the Option
Securities occurs after the Closing Date, the Company will deliver to the
Representative on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements.
(a) The Company agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus without your prior
consent. Subject to the foregoing sentence, if the Registration Statement
has become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will cause
the Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time
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period prescribed and will provide evidence satisfactory to the
Representative of such timely filing. The Company will promptly advise the
Representative (A) when the Registration Statement, if not effective at
the Execution Time, and any amendment thereto, shall have become
effective, (B) when the Prospectus, and any supplement thereto, shall have
been filed (if required) with the Commission pursuant to Rule 424(b), (C)
when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (D) of any request by the Commission for any amendment of the
Registration Statement or supplement to the Prospectus or for any
additional information, (E) of the issuance by the Commission of any stop
order suspending the effective ness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (F) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules thereunder, the Company promptly will prepare and file
with the Commission, subject to the second sentence of paragraph (a) of
this Section 5, an amendment or
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supplement which will correct such statement or omission or effect such
compliance.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representative an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(iv) The Company will furnish to the Representative and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so long
as delivery of a prospectus by an Underwriter or dealer may be required by
the Act, as many copies of each Preliminary Prospectus and the Prospectus
and any supplement thereto as the Representative may reasonably request.
[The Company will furnish or cause to be furnished to the Representative
copies of all reports on Form SR required by Rule 463 under the Act.] The
Company will pay the expenses of printing or other production of all
documents relating to the offering.
(v) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representative may
designate, and will maintain such qualifications in effect so long as
required for the distribution of the Securities and will pay the fee of
the National Association of Securities Dealers, Inc., in connection with
its review of the offering.
(vi) The Company will apply the net proceeds from the sale of the
Securities in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(vii) The Company will not, for a period of
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90 days following the Execution Time, without the prior written consent
of Unterberg Harris, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, any other shares
of Common Stock or any securities convertible into, or exchangeable for,
shares of Common Stock; provided, however, that the Company may (a) issue
and sell Common Stock pursuant to any employee stock option plan in effect
at the Execution Time, (b) issue Common Stock issuable upon the conversion
of securities or the exercise of warrants outstanding at the Execution
Time, and (c) if so provided in the Company's Savings and Protection Plan
at the Execution Time, issue Common Stock as all or part of the Company's
"Employer Matching Contributions" thereunder, as that term is defined
therein.
(viii) The Company will pay all expenses, fees and taxes (other than
any transfer taxes and fees and disbursements of counsel for the
Underwriters except as set forth under Section 7 hereof) in connection
with (i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment),
(ii) the issuance, sale and delivery of the Securities by the Company and
the Selling Shareholders, (iii) the word processing or printing, and
reproduction and distribution, of this Agreement, any Agreement Among
Underwriters, any dealer agreements, any Statements of Information and the
Custody Agreements and the reproduction or printing and furnishing of
copies of each thereof to the Underwriters and to dealers (including costs
of mailing and shipment), (iv) the distribution of the terms of agreement
relating to the organization of the underwriting syndicate and selling
group to the members thereof by mail, telex, telecopy or other means of
communication, (v) the qualification of the Securities
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for offering and sale under state laws and the determination of their
eligibility for investment under state law as aforesaid (including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters) and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers,
(vi) any listing of the Securities on any securities exchange or
designation of the Securities for inclusion on the NASDAQ SmallCap Market
and any registration thereof under the Exchange Act, (vii) the filing for
review of the public offering of the Securities by the National
Association of Securities Dealers, Inc. (the "NASD"), and (viii) the
performance of the Company's and the Selling Shareholders' other
obligations hereunder; and
(b) Each Selling Shareholder agrees with the several Underwriters
that such Selling Shareholder will not, during the period of 90 days following
the Execution Time, without the prior written consent of Unterberg Harris,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any other shares of Common Stock
beneficially owned by such person, or any securities convertible into, or
exchangeable for, shares of Common Stock.
6. Conditions to the obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Shareholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Shareholders of their respective obligations hereunder and to the following
additional conditions:
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(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representative agree in writing to a later time,
the Registration Statement will become effective not later than (i) 6:00 PM New
York City time on the date of determination of the public offering price, if
such determination occurred at or prior to 3:00 PM New York City time on such
date or (ii) 10:00 AM on the business day following the day on which the public
offering price was determined, if such determination occurred after 3:00 PM New
York City time on such date; if filing of the Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period required by
Rule 424(b); and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(b) The Company shall have furnished to the Representative the
opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, counsel for the Company, dated the Closing Date,
to the effect that:
(i) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate power and
authority to own its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification wherein it owns or leases material
properties or conducts material business; and each subsidiary,
(individually a "Subsidiary" and collectively the "Subsidiaries") is
inactive, and the Subsidiaries do not, either individually or in the
aggregate, own or lease a material portion of the Company's property or
assets or conduct a material portion of the Company's business;
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(ii) all the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus
(including the security interests of NationsBanc Commercial Corporation
and AT&T Commercial Finance Corporation described therein), all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and
clear of any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interests, claims, liens or
encumbrances;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Prospectus; the outstanding shares of
Common Stock (including the Securities being sold hereunder by the Selling
Shareholders) have been duly and validly authorized and issued and are
fully paid and nonassessable; the Securities being sold hereunder by the
Company have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this Agreement,
will be fully paid and nonassessable; the Securities being sold hereunder
by the Company and by the Selling Shareholders are duly designated for
inclusion, subject to official notice of issuance by the Company, on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
SmallCap Market System; the certificates for the Securities are in valid
and sufficient form; and to the best knowledge of such counsel, the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the Securities;
(iv) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or
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body or any arbitrator involving the Company or any of its subsidiaries of
a character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectus, and to the best knowledge
of such counsel, there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit, which is not described or filed
as required;
(v) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus (other than
the financial statements and other financial and statistical information
contained therein as to which such counsel need express no opinion) comply
as to form in all material respects with the applicable requirements of
the Act and the rules thereunder; and such counsel has no reason to
believe that at the Effective Date the Registration Statement contained
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(vi) this Agreement has been duly authorized, executed and delivered
by the Company;
(vii) no consent, approval, authorization or
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order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except such as have
been obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters and such other approvals (specified
in such opinion) as have been obtained;
(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation of, or constitute a default under any law or the charter or
by-laws of the Company or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Company or any of its
subsidiaries is a party or bound or any judgment, order or decree known to
such counsel to be applicable to the Company or any of its subsidiaries of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
subsidiaries; and
(ix) except to the extent set forth in the Prospectus or waived with
respect to registration of any of the Securities to be issued and sold
pursuant to this Agreement, no holders of securities of the Company have
rights to the registration of such securities under the Registration
Statement.
In rendering such opinions, such counsel may rely (A) as to matters involving
the application of laws of any jurisdiction other than the State of New Jersey
or the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for the Underwriters and (B) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Refer-
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ence to the Prospectus in this paragraph (b) include any supplements thereto at
the Closing Date.
(c) The Selling Shareholders shall have furnished to the
Representative the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, counsel for the Selling
Shareholders, dated the Closing Date, to the effect that:
(i) this Agreement and the Power of Attorney and Custody Agreement
have been duly authorized, executed and delivered by the Selling
Shareholders, the Power of Attorney and Custody Agreement is valid and
binding on the Selling Shareholders and each Selling Shareholder has full
legal right and authority to sell, transfer and deliver in the manner
provided in this Agreement and the Power of Attorney and Custody Agreement
the Securities being sold by such Selling Shareholder hereunder;
(ii) the delivery by each Selling Shareholder to the several
Underwriters of certificates for the Securities being sold hereunder by
such Selling Shareholder against payment therefor as provided herein, will
pass good and marketable title to such Securities to the several
Underwriters, free and clear of all liens, encumbrances, equities and
claims whatsoever;
(iii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by any
Selling Shareholder of the transactions contemplated herein, except such
as may have been obtained under the Act and such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been obtained; and
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(iv) neither the sale of the Securities being sold by any Selling
Shareholder nor the consummation of any other of the transactions herein
contemplated by any Selling Shareholder or the fulfillment of the terms
hereof by any Selling Shareholder will conflict with, result in a breach
or violation of, or constitute a default under any law or certificate of
limited partnership or limited partnership agreement of any Selling
Shareholder or the terms of any indenture or other agreement or instrument
known to such counsel and to which any Selling Shareholder is a party or
bound, or any judgment, order or decree known to such counsel to be
applicable to any Selling Shareholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over any Selling Shareholder.
(v) to the best of such counsel's knowledge, the statements in the
Prospectus under the caption "Principal and Selling Shareholders" insofar
as such statements constitute a summary of the matters referred to therein
present fairly the information called for with respect to such matters.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New Jersey or
the United States, to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters, and (B) as to
matters of fact, to the extent they deem proper, on certificates of the Selling
Shareholders or of responsible officers of the Selling Shareholders and public
officials or on the certificate of limited partnership and partnership agreement
of the Selling Shareholders.
(d) The Representative shall have received from Cravath, Swaine &
▇▇▇▇▇, counsel for the Underwriters, such opinions or letters, dated the Closing
Date, with respect to
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the issuance and sale of the Securities, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related matters as
the Representative may reasonably require, and the Company and each Selling
Shareholder shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representative a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be per formed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto), there
has been no material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its subsidiaries,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
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(f) At the Execution Time and at the Closing Date, Ernst & Young
shall have furnished to the Representative a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representative, confirming that they are
independent accountants within the meaning of the Act and the applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited consolidated financial statements
and financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited consolidated
financial statements made available by the Company and its subsidiaries;
their limited review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
interim financial information for the six-month period ended June 30,
1997, and as at [ ], 1997, as indicated in their report dated August [ ],
1997; carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments
set forth in such letter; a reading of the minutes of the meetings of the
Shareholders, directors and audit and compensation committees of the
Company and the Subsidiaries; and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters of
the Company and its subsidiaries as to transactions and events subsequent
to June 30, 1997, nothing came to their attention which caused them to
believe that:
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(1) any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply in form in
all material respects with applicable accounting requirements of the
Act and with the published rules and regulations of the Commission
with respect to registration statements on Form S-2; and said
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus;
(2) with respect to the period subsequent to June 30, 1997,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the notes payable
or long-term debt of the Company and the Subsidiaries or capital
stock of the Company or decreases in the Shareholders' equity of the
Company or decreases in working capital of the Company and the
Subsidiaries as compared with the amounts shown on the June 30, 1997
consolidated balance sheet included in the Registration Statement
and the Prospectus, or for the period from July 1, 1997 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year and the corresponding
period in the preceding quarter in net sales or gross profit or
income before provision for income taxes or income from continuing
operations or net income, of the Company and the Subsidiaries,
except in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Representative;
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(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Registration Statement
and the Prospectus, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (e) include any supplement
thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (g) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the
Representative, so material and adverse as to make it impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Registration Statement(exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(h) At the Execution Time, the Company shall have furnished to the
Representative a letter substantially in the form of Exhibit A hereto from each
warrantholder, each holder of the Company's Series B or Series C Preferred
Stock, each officer and director of the Company and each Selling Shareholder,
addressed to the Representative, in which each such person agrees not to offer,
sell or contract to sell, or otherwise dispose of, directly or indirectly, or
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announce an offering of, any shares of Common Stock beneficially owned by such
person or any securities convertible into, or exchangeable for, shares of Common
Stock for a period of 90 days following the Execution Time, without the prior
written consent of Unterberg Harris.
(i) Prior to the Closing Date, the Company shall have furnished to
the Representative such further information, certificates and documents as the
Representative may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representative and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representative. Notice of such
cancellation shall be given to the Company and each Selling Shareholder in
writing or by telephone or telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company or any Selling
Shareholder to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel, but not including, for
purposes of this Section 7, any lost profits of the Underwriters) that shall
have been incurred by them in connection with the proposed purchase and sale of
the
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Securities. If the Company is required to make any payments to the Underwriters
under this Section 7 because of any Selling Shareholder's refusal, inability or
failure to satisfy any condition to the obligations of the Underwriters set
forth in Section 6, such Selling Shareholder shall reimburse the Company on
demand for all amounts so paid.
8. Indemnification and Contribution. (a) The Company and the Selling
Shareholders jointly and severally agree to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
Act or the Securities Exchange Act of 1934 (the "Exchange Act") against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i) the
Company and the Selling Shareholders will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representative
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specifically for inclusion therein and (ii) such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
director, officer, employee or agent of such Underwriter or any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased the Securities that are the subject thereof
if such person did not receive a copy of the Prospectus (or the Prospectus as
supplemented) excluding documents incorporated therein by reference at or prior
to the confirmation of the sale of such Securities to such person in any case
where such delivery is required under the Act and any untrue statement or
omission of a material fact contained in any Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as supplemented). This indemnity
agreement will be in addition to any liability which the Company or the Selling
Shareholders may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each Selling Shareholder, to
the same extent as the foregoing indemnity to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representative
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company and each Selling Shareholder
acknowledge that the statements set forth in the last paragraph of the cover
page and under the heading "Underwriting" in any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on behalf
of the several Underwriters for inclusion in any Preliminary Prospectus or the
Prospectus, and you, as the Representative, confirm that such statements are
correct.
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(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of
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the institution of such action or (iv) the indemnifying party shall authorize
the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Selling Shareholders,
jointly and severally, and the Underwriters agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, one or more of the Selling
Shareholders and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and by the Underwriters on
the other from the offering of the Securities; provided, however, that in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the Company
and the Selling Shareholders, jointly and severally, and the Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the
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relative fault of the Company and the Selling Shareholders on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Selling Shareholders
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses), and benefits received by the Underwriters shall be deemed
to be equal to the total underwriting discounts and commissions, in each case as
set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company, the Selling Shareholders or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that it would
not be just and equitable if contribution were determined by pro rata allocation
or any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) Without limitation of and in addition to its obligations under
the other paragraphs of this Section 8,
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the Company agrees to indemnify and hold harmless ▇▇▇▇▇▇▇ Securities Inc. in its
role as a "qualified independent underwriter" (within the meaning of Rule 2720
of the Conduct Rules of the NASD), its directors, officers, employees and agents
and each person who controls ▇▇▇▇▇▇▇ Securities Inc. within the meaning of
either the Act or the Exchange Act, provided that they comply with Rule 2720 of
the Conduct Rules of the NASD, against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
that are separate or different from liabilities as an Underwriter referred to in
Section 8(a), insofar as such losses, claims, damages or liabilities (or action
in respect thereof) arise out of or are based upon ▇▇▇▇▇▇▇ Securities Inc.'s
acting as a "qualified independent underwriter" in connection with the offering
contemplated by this Agreement, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(f) The liability of each Selling Shareholder under such Selling
Shareholder's representations and warranties contained in Section I hereof and
under the indemnity and contribution agreements contained in this Section 8
shall be limited to an amount equal to the net proceeds of the Securities sold
by such Selling Shareholder to the Underwriters. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the
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respective proportions which the amount of Securities set forth opposite their
names in Schedule I hereto bears to the aggregate amount of Securities set forth
opposite the names of all the remaining Underwriters) the Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Securities which the
defaulting Under writer or Underwriters agreed but failed to purchase shall
exceed 10% of the aggregate amount of Securities set forth in Schedule I hereto,
the remaining Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter, the Selling
Shareholders or the Company. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date shall be postponed for such period,
not exceeding seven days, as the Representative shall determine in order that
the required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company, the Selling Shareholders and any nondefaulting Underwriter for
damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representative, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in the Company's Common Stock shall have been suspended by the
Commission or the NASDAQ SmallCap Market System or trading in securities
generally on the New York Stock Exchange, the NASDAQ National Market System or
the NASDAQ SmallCap Market System shall have been suspended or limited or
minimum prices shall have been established on either such Exchange or Market
System, (ii) a banking moratorium shall have been declared either by Federal
authorities or by authorities in the States of New York or New Jersey or (iii)
there shall have occurred any outbreak
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or escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any supplement
thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Shareholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Shareholder or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telegraphed and confirmed to it, in care of Unterberg Harris, ▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of the President and chief
Executive Officer; or if sent to a Selling Shareholder, will be mailed,
delivered or telegraphed and confirmed to such Selling Shareholder at the
address of such Selling Shareholder set forth in Schedule II hereto.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
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14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
ECCS, Inc.,
By:
_____________________________________
Name:
Title:
By:
_____________________________________
Attorney-in-Fact
By:
_____________________________________
Attorney-in-Fact
By:
_____________________________________
Attorney-in-Fact
By:
_____________________________________
Attorney-in-Fact
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The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written
Unterberg Harris
By: Unterberg Harris
By:
__________________________________________
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
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SCHEDULE I
Number of Shares of
Underwritten Securities
Underwriters To Be Purchased
------------ -----------------------
Unterberg Harris.........................
-----------------------
Total............
=======================
42
SCHEDULE II
Number of Shares of
Underwritten
Selling Securities
Shareholders Address To Be Sold
------------ ------- -------------------
--
TOTAL.................
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SCHEDULE III
Maximum Number
of Shares of Option
Name Securities to be Sold
---- ---------------------
ECCS, Inc.
---------------------
Total...........................
=====================